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Broadcom? Just say no, Emulex tells shareholders

Board dismisses 'on the cheap' acquisition attempt

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Emulex has written to its shareholders, saying that Emulex's design wins "are now threatening Broadcom's long dominant Ethernet networking market position."

The Emulex defence to the unwanted and hostile Broadcom takeover bid has been that it grossly undervalues Emulex at its $9.25/share bid price.

Emulex has added meat to this bone. First, it has this to say about Broadcom's attempt to remove its poison pill defence: "Broadcom's hostile takeover attempt also consists of a consent solicitation that aims to ultimately remove Emulex's entire Board and appoint in its place nominees hand-picked by Broadcom. We believe these nominees, if elected, will pursue Broadcom's self-serving agenda of acquiring Emulex on-the-cheap to the detriment of Emulex's stockholders."

Secondly, Emulex is talking up its Fibre Channel over Ethernet (FCoE) and HBA prospects, saying it: "expects to double its addressable market to nearly $1.5 billion by calendar 2013. Over the past several months alone, Emulex has achieved 12 new design wins with tier-one OEMs, which prior to the Broadcom proposal were unannounced and non-public. We anticipate these 12 design wins will support the vast majority of our projected $150 million in converged networking revenues in fiscal year 2012, increasing Emulex's total revenue to $600 million."

Emulex's board thinks its design wins threaten Broadcom's core Ethernet business - indeed, many were won in competition against Broadcom - and that this is a prime reason Broadcom is trying to buy Emulex, just as much as the aim of buying in needed FCoE technology.

The Emulex board would have us understand that, instead of successful Broadcom looking to buy weak Emulex, it is a case of failing Broadcom looking for succour by buying Emulex.

Emulex stresses that it continues to gain design wins, ones with IBM for its 8Gbit/s Fibre Channel HBAs were announced today, and convert them into business revenue. However, while fellow HBA and CNA vendor QLogic has announced an IBM design win for its Converged Network Adapter today, Emulex has been unable to reveal any CNA design wins.

Emulex re-asserts that Broadcom's offer is inadequate, suggesting or implying either that an improved offer should be considered by Broadcom or that Broadcom should look elswhere for its future. ®